Thursday, 29 December 2016

Adapting to the new age of consumer mindsets


The first part of this series discussed the evolution and change in socio-economic norms that govern the global economy. The neo-liberal economic model which emerged as a prominent mind set for economic governance is slowly being reinvented by the same institutions that put them in prominence more than three decades ago.
This global phenomenon, seen particularly through the recent EU shake up and US presidential election, boggled the mind of political and economic analysts around the world.
While Brexit was too close to call, most of the American media could not see Trump's unconventional approach to governance ever taking mainstream, yet on the 9th of November they all woke up to a paradigm shift - the realization that our economic systems may have a new face in the future.
The signs of this change, however, didn't go unnoticed. At the World Economic Forum 2016, many experts alluded to this change. While the movement towards complete privatization and deregulation of markets gained momentum around the 1980s, the start of this decade demonstrated a shift - the economy as a whole was going through its fourth revolution, called Industry 4.0.
While discussions on Industry 4.0 focused on the rapid digitalization affecting business, it also created massive free flow of information that allowed consumers to access an unprecedented amount of information, at the tip of their fingers. They would have unlimited access to product information, global trends, good and bad reviews, and gained not just expert insight, but also moral insight of the people running the businesses that make their products.
The old saying goes, "the customer is king". Despite the advent of social media, the generation commonly known as "Generation X", are still the current true holders of purchasing power.
This generation is conservative when it comes to expressing their views online. However, they are the silent kings - the consumer generation in which their values dominate the whims and fancies of the generation they are still financially responsible for.
Rest assured that in time, a new generation will then ascend to dominate the purchasing demographic, with its own peculiarities of consumerism.
With this in mind, it is now ever more important to develop sensitivity to the dynamics of those consuming our products. We have come to that juncture in time where production efficiency should no longer be considered leaps in management, but basic foundations that allow focus on the true objective - a customer oriented workflow.
However, deeper understanding of consumer behaviour must exist at both cultural and technical form, i.e. the mind set of unidimensional consumer feedback methodology has to be challenged at its very core. The reinvention of marketing and sales must engage directly with new behaviours of the consumer, with inbound marketing taking over outbound approaches.
The new consumer can no longer be told, but must firstly be understood. They should then be satisfied through not just point-of-sales retail method, but immersive ownership experience that solidifies brand loyalty.
Consumers are not defined just the individuals that buy cars. Moving down the supply chain, vendors do not deal with individuals, but their OEM principles. However, the concept of the more-informed-than-ever customer remains the same, i.e. they are more technologically advanced and they expect vendors not to be just their part suppliers, but partners in the ever growing technological complexity the OEMs are facing. Simply put, the lines of the consumer-supplier relationship will become blurred even more because of Industry 4.0.
In the next part, we will look at specifics on how the Industry 4.0 can be leveraged to accomplish a holistic customer oriented business workflow.
"Businesses only handle the money. It is the customer who pays the wages"
The writer is the chief executive officer of the Malaysia Automotive Institute. This is the second part of a series of articles in conjunction with the arrival of the year 2017.

Read the first part of the series articles here: http://bit.ly/2jhlQOj
Read the third part of the series articles here:  http://bit.ly/2joAENP

Thursday, 22 December 2016

Facing challenges with a glass-half-full attitude


The discipline of engineering emphasizes the continuous application of the principles of science and technology to design and build solutions to problems.
Problems are also a matter of perspectives. Human civilisation was built on innovation, which throughout history has been sparked by new problems - i.e. a problem can appear and disrupt our lives, or in many cases, the innovator comes to a realisation that the current state or method is in itself problematic, spurring a need to develop better ways of doing things.
Even then, disruptive problems may also have silver linings, paving the way for arising opportunities.
2016 has undoubtedly been a challenging year, not for just the industry, but also at the domestic and international stages.

Traditionally, the US and Europe have shaped the socio-economic norms of society, founded on a firm belief of the free market and limitless equality, demonstrated through their years of global economic domination.
This year however, our norms were challenged as numerous collectives began voicing out disenfranchisement as a product of such liberal practices.
This led to two major events that challenged our conventional theories of governance - a public approval of Britain's exit from the European Union and the election of a US President with an unconventional world view of public administration.
On the domestic front, it is undeniable that just like other sectors, the local automotive industry has not been spared from the challenges posed from the current uncertain economy. Naturally, prolonged economic uncertainty will curb consumer spending - leading to the reduced figures expected by the end of this year.
Numerous articles in this column have propagated the gradual move towards a liberalised economy, as market forces are the best determinant of the power balance between the producers and consumers.
However, we are a nation developing in the shadow of more advanced countries, and this gives us the advantage of predicting the future based on the history of others.
On that note, there is much we can learn from the current state of the globalised economy. One thing we certainly have learned is that the only thing constant is change. This year was a good lesson on how products, competition, society and expectation has changed, especially as the internet has destroyed the normal rules of the game.
Taking a step back - the current uncertainty is not a recent phenomenon, it can be traced back to the last quarter of 2014 - seen through the appreciation of the USD back in January 2015. Despite this, Malaysia's Total Industry Volume (TIV) and Total Production Volume (TPV) still managed to record all-time high figures in 2015.
Furthermore, jobs in the sector have continued to increase (25,870 new jobs expected by the end of 2016), and more technology penetration is seen throughout 2016 at both the OEM and vendor levels.
These are just some of the figures that indicate that for the last three years, we have created a stronger foundation through the NAP2014 - it has developed an industry which has proven to be more resilient to economic cycles.
Resilience is an important keyword here - it means that the problems and challenges faced by the industry at this very point in time is no longer a battle for survival, but rather a stumbling block, in fact an inconvenience to an eventual success in the future.
This article is the first part in a series of articles discussing the industry's outlook towards facing internal and external challenges.
In later parts of this series, we will discuss specifics in addressing such challenges, and how as an automotive fraternity, we can face them.

"Difficult roads often lead to beautiful destinations"

The writer is the chief executive officer of Malaysia Automotive Institute.

Read the second part of the series articles here: http://bit.ly/2j48xmV
Read the third part of the series articles here:  http://bit.ly/2joAENP

Thursday, 15 December 2016

Push for environmental agenda needs participation of all parties


The first and second parts of this series discussed the economic prioritisation and technological areas for an environmental agenda to materialise.

However, public awareness and green technology within the automotive sector is only part of the equation, as the automotive industry has an undeniable interdependence with various industries and  sectors – due to the vastness of technology, human talent, materials and policies that affect the automotive ecosystem.

In general, carbon emissions are a factor of engine efficiency, as well as the pollution resulting from the numerous processes utilised in vehicle production.

For example, material usage must be viewed from its volume of consumption, its type, process and disposal methodology and in-process energy consumption.

To increase energy efficiency in vehicles, the introduction of alternative powertrain vehicles, such as plug-in hybrids, battery electric vehicles (BEVs) and fuel-cell vehicles (FCVs) have showed a lot of promise and has excited public awareness on green initiatives. The success of these new technologies is however subject one major caveat – the infrastructure and ecosystem in the management and running of such vehicles must be regulated and developed with a built-in eco-friendly mindset and approach.

As a vehicle unit, there is definitely a reduction of carbon emissions due to the reduction or elimination of fossil fuels to power the vehicle. However, one needs to take a bird’s eye view of the entire carbon footprint of the entire vehicle life cycle, in order to claim successful carbon reduction.

The manufacturing process of lightweight materials and batteries must be consistent with the environmental intentions of the vehicle design. Current battery technology, for example, rely on the extraction of rare metals, which if not managed properly, will merely balance out the gains in reducing pollution.

Similarly, the electricity used to charge electric vehicles must come from greener sources. If polluting energy generation is utilised to cater to the higher power grid demands due to the use of electric vehicles, then a net reduction in carbon emission will not exist - carbon emissions are merely transferred from the motorist to the power plant.

The quality of fossil fuels should also be a subject of great interest for industry players and regulators. As the dependance on fossil fuels will still be present in the foreseeable future, energy efficient engines will also rely on fuel quality to ensure they meet the targeted emission requirements.

In order to push the environmental agenda forward, it therefore requires participation of industry players, technologists as well as regulators and policy makers – crossing the numerous ministries and agencies that are tasked to regulate the different sectors that contribute to vehicle manufacturing, usage and consumption.

Although the National Automotive Policy 2014 was initiated as a roadmap towards achieving competitiveness in 2020, the Ministry of International Trade and Industry is working through MAI and in collaboration with numerous ministries and agencies to chart and forecast vehicle technology penetration and consumption patterns up to the year 2050. This project will provide a bird’s eye view for the planning, formulation and implementation of eco-friendly policies for the decades to come.

In conclusion, the efforts towards sustainable mobility is not just a burden of the automotive industry. While the demand for green initiatives have centred around vehicles, transportation is not just a concern for vehicle producers and industry regulators. The entire ecosystem has an impact which is far reaching beyond the production floor, and into all sectors within the economy.

“We do not inherit the earth from our ancestors, we borrow it from our children”

The writer is the chief executive officer of Malaysia Automotive Institute. The is the third and final series on the environmental agenda of MAI.

Read the first part of the series articles here: http://tinyurl.com/zbmj2jc
Read the second part of the series articles here: http://tinyurl.com/jt2nzsg

Thursday, 1 December 2016

Cradle-to-cradle mindset key to preserving environment


The first part of this series discussed global trends pertaining to environmental agendas, and its challenges in relation to economic prioritization. As a significant portion of carbon emissions are products of transportation and related industries, it therefore becomes a moral responsibility of the automotive industry to lead eco-preservation efforts, utilizing the same technological and engineering approaches it is well known for.
The vehicle life process is conventionally viewed from its factory approval stamp, its purchase, life-in-use and finally its disposal.
While this overview may be accurate from the consumer point of view, the actual vehicle life cycle goes through a longer course of events.
At its basic form, a vehicle's actual life cycle starts at the design & development stage, followed by its manufacturing, after sales and its end of life.
Perhaps the most crucial point of the vehicle's life is the product design & development stage, where design considerations and decisions taking place upstream affect the entire value chain. It is at this point that materials and functionality of products receive meaning and specification - defining the intended level of eco-friendly features to roll out at the final assembly line.
Numerous OEMs have initiated the use of recycled and non-virgin (i.e. not extracted from the earth) materials into their design programs, such as the use of bio-plastics or water based paints. At the same time, energy efficiencies policies, such as the NAP2014, expedites the penetration of carbon reducing powertrain technology, further impacting the environment positively.
It is also important that energy efficiency is built into the manufacturing processes of vehicles and components. While green manufacturing technologies are becoming ever so common in today's competitive world, the application of Design for Manufacturing also plays an important role in product and process development of automotive products and components.
However, environmental management becomes more complicated beyond the point of purchase. While complexities can be managed before this point through efficient standards and best practices, consumer awareness towards environmental efforts pose a large problem - behaviour and attitudes become difficult to manage and are multi-factorial in its root cause.
As mentioned in the first part, economic balance is usually the reason for a digression in eco-friendly attitudes. Perhaps the best way to enhance public participation in the environmental agenda should be derived through the economic route.
Through the NAP2014, two roadmaps were formulated specifically to tackle issues within the aftermarket sector. The first, named the Authorised Treatment Facility Roadmap (ATF), aims to enhance standards and practices among workshops and service centres. Simply put, ATFs are not only responsible to keep vehicles running, but ensuring the consumer is given the safest, most economical and participative experience throughout the service life of the vehicles they own.
The second roadmap, the Malaysia Remanufacturing Roadmap (MRR), serves to guide Malaysia's automotive industry towards an advanced stage of reintroduction of used parts into the vehicle and component replacement market (REM). Imagine the potential when owners are able to trade-in their used parts, and these parts are then "remanufactured" into parts that are as good as new, with the same warranties and safety assurances.
This cash trade process becomes an incentive for the consumers to participate in the eco-friendly automotive value chain. Most importantly, the system allows the reuse of materials - ensuring that the use of virgin materials are further reduced.
In conclusion, the processes that make up the vehicle life cycle, from product conceptualisation all the way to remanufacturing, have significant impacts to environmental preservation. The mentality change from "Cradle-to-grave" to "Cradle-to-cradle" would help tremendously in ensuring sustainable development of the automotive industry.
Most noteworthy, is that environmental consciousness must be an in-built factor into all activities and decision making process within the entire value chain.
The writer is the chief executive officer of Malaysia Automotive Institute. This is the second article in a series on the environmental agenda of MAI.

Read the third part of the series articles here: http://tinyurl.com/zrqhkk7